ArabianMoney.Net

First with Financial Comment from Arabia

Ten reasons not to be optimistic about 2010

with 12 comments

1. Global bank balance sheets remain loaded with toxic assets. The real banking crisis has not started. Government bailouts have delayed the day of reckoning, not eliminated it.

2. Stock markets rebounded ‘too far, too fast’ in 2009 and are overdue for a big correction, see the Bradley forecast.

3. Chinese exports fell around 20 per cent in 2009, and have not recovered. Global trade continues to reel from the worst crash since the 1930s.

4. US consumer and commercial lending is sharply down. The banks still are not lending for spending.

5. Property values continue to deteriorate around the world putting new financial pressure on owners and banks. US mortgage resets are the sub-prime crisis part two.

6. A double-dip recession like 1980-82 is the most likely scenario with a further leg down in the second half of 2010. The 2009 downturn was too short following a major financial crisis.

7. Emerging markets like India and China are faking their growth – Chinese exports for example are in a deep depression. These markets are anyway too small to lead global recovery.

8. Oil prices are too high, and generally depress economic activity.

9. The record gold price indicates that smart investors are expecting the worst.

10. In past major global financial crises a bond market crash has always been the final phase, and we have not seen that yet. This will bring much higher interest rates, and a boom in the gold price.

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12 Responses

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  1. Lets stop a minute to see what BHO is trying to do in his effort to ring in a one world government under his so called “leadership”. He’ll do anything that he can interpret as some one else’s fault, eg. first stimulus package. He won’t do anything for which he must take blame for, eg. the unemployment problem. If he fails to get re-elected he’ll use WJC’s tactics to stay in the world limelight to keep pushing himself in the forefront of world affairs in order to show his “leadership” through his speech writer’s abilities as he has done for over a year. Caveat emptor every one!

    K. Bob Furuike

    January 9, 2010 at 9:02 am

  2. I protest on your assessment of property values: what about the Australian property market, latest figures have it up 17% in Melbourne after the slump? Australian new job ads unusually strong in December. Its not all bad.

    amba

    January 4, 2010 at 10:55 pm

  3. Terry: Those on various forms of government support in USA arfe rarely there by choice. I extended the hospitality of my apartment a few eyars ago to a lady whom I am not in the process of evicting. seh is on SSI and Medicaid. She needs an operation on her knee to keep her from falling over periodically, but ehr for-profit Medicaid provider has succeeded for the past four years to avoid giving her this operation.

    She also needs extensive psychotherapy for the miserable problems in her life from her present prospect of being homeless on 1Feb to the unresolved miseries of her child who died in an auto crash, but the Medicaid provider has also avoided getting her this even though she is in desperate need of help.

    We need to improve life for those at the very bottom.

    W.

    Walter Siegal

    January 2, 2010 at 9:07 pm

  4. Horace,

    What “conservatives” are you talking about? The true free market solution that most conservatives that I know advocate did not happen. It is to let those that failed to truly fail. No taxpayer bailout or anything. Then after a painful but most likely relatively short correction, the imbalances can be worked out and the foundation of a more true balanced recovery takes place.

    The free market is workable…if it allowed to truly be a free market….which the government has hindered in various ways for a long time.

    Ray

    January 1, 2010 at 10:45 pm

  5. In response to Terry S. – I agree with you all the way, except I believe that GW Bush has his share of blame too. I say this as someone who voted GOP for 45 years, and voted for Bushy twice. The first bailouts came under his governance,against 80% of the public will. He should have vetoed them and put Paulson in prison. I will probably never vote GOP again, can’t vote Dem. so will wait for a good 3rd party, and vote my conscience in the meantime – probably Constitution Party. Don’t lecture me about “throwing my vote away” either. From now on I vote my conscience.

    foldenrev

    January 1, 2010 at 10:08 pm

  6. Edna,
    I think the people are fed up, just not the one’s who always are on the dole.he permanent welfare class.
    Most by choice.

    We are dead broke, I mean completely broke.
    Yet the morons in D.C. contiue to add one more SCAM to the next,Obama, Bernanke, and Geithner, are in Catch 22.
    There is NOTHING they can do to save this ship.(since they planned to sink it any way).

    As for Bushg starting this, a misnomer……
    People do not folow facts.

    This entire debacle was started by Freddie Mac, and Fannie Mae’s disasters.
    Kept running by who?.
    The Dems, and esp Bawney Fwank.
    Everyone, cannot afford a home, and the upokeep that goes with it………….and their is nothing written in the Const & BOR’s that guarantee it……….just in the Dems minds.

    He(Bawney) was REPEATEDLY warned, bu Bush,McCain, and Ron Paul…………to STOP THAT ENGINE.

    Your headed for big trouble………Bawney, and the dems had the power to stop any bills the Pubs tried to stop this, so they did not even try.
    This is when the GS crash occured.

    IF Paulson, and Bush had not acted, the WORLDS FINANCIAL SYSTEM would have crashed.
    That was done properly.

    Everything AFTER that, is the disaster………and not needed, unless you want to change the Republic into a Fascist state.
    So that’s what they did.

    Terry S

    January 1, 2010 at 7:27 pm

  7. George Bush and Henry Paulson started the crisis by bailing out Goldman Sachs. Their trick was to make believe it was all about rescuing AIG. So-called conservatives love talking double: they hardly peeped as Bush and Paulson carried out their fraud. Conservatives say “free market” when they mean taxpayers must take the risk while fat cats walk off holding the swag. Liberals are no better, since they too like to print fiat money, thus stealing the private savings that finance growing companies.
    The American system is dead and both conservatives and liberal are feeding off the carcass.

    horace

    January 1, 2010 at 6:12 pm

  8. Peter

    The banking chaos is just STARTING as you imply. The FDIC is broke and will be hiring nearly 2,000 more employees to root out the “dead” banks in 2010.
    %50 of the U.S. citizens pay no taxes and are more than glad to re-elect the charlatans in D.C. who dole out other people’s money. THIS November may be the last election that the soon to be minority taxpayers can boot out these incumbants. If the “Shamnesty” bill is passed prior and gives the now illegals soon to be “citizens” voting rights–The Game is over. IMO

    Smitty

    January 1, 2010 at 4:00 am

  9. Asian investors are too stupid to realize they’re being tricked into buying USTs. The Fed will monetize. It has to. no Government in the US would survive year on year deflation, foreclosure, bankruptcy, lawsuits, congressional hearings, etc. etc.

    Either the US Government slashes spending by 70% (not going to happen) – or the lenders to the US Government get crushed.
    American society is breaking down. And we’re not even at 20% unemployment yet. Wait until asset prices correct to pre-1980 levels ….

    No one will invest new money because everyone now understands that tax increases = DEFLATION. The economy is set to implode. People have all but stopped spending money now that the writing is on the wall. The Government has not yet stopped spending, because (at least for a few more months – MAYBE a few more quarters) they can continue to borrow at 0%.

    Local radio shows are now openly discussing the fact that the US Government has been taken over by a financial industry crime syndicate determined to destroy the lives of American citizens and businesses in order to protect the products Goldman Sachs and JP Morgan have sold to international “investors.”

    Caveat Emptor.

    Karma 1

    January 1, 2010 at 1:37 am

  10. A bond market crash will indeed bring much higher interest rates (which will kill the economy) – but would lift the dollar. How would that cause a boom in the gold price?!

    Ed Note: by causing a flight to safe havens

    Vess

    December 31, 2009 at 10:53 pm

  11. The US. will continue to do what it wants with the support of Kuwait and many Arab nations. Cheap oil will fuel their ability to continue their “charade”.

    Thomass

    December 31, 2009 at 9:43 pm

  12. Peter,

    I would agree with your thesis. However, I don’t think the “people” are fed up enough with government bailouts. That means the bailouts will continue and the markets will continue to hold up (and may even climb). After the Nov US elections the talk will become more serious as elected officials can worry about the “future” (that is, a year out) aloud without losing their jobs. The market has become about government entirely. Failure of large, politically important companies will not be allowed.

    Edna R. Rider

    December 30, 2009 at 4:51 pm


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